International Evidence on Recovery from Recessions

By Valerie Cerra, Sweta Chaman Saxena, Ugo Panizza

August 1, 2009

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Valerie Cerra, Sweta Chaman Saxena, and Ugo Panizza. International Evidence on Recovery from Recessions, (USA: International Monetary Fund, 2009) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Although negative shocks have persistent effects on output on average, this paper shows that macroeconomic policies and the structure of the economy can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that are asymmetrically stronger than in nonrecovery years. Real depreciation and the exchange rate regime also have asymmetric growth effects in a recovery year relative to other years of expansion. Recoveries are more sluggish in open economies, partly because fiscal policy is less effective than in closed economies.

Subject: Banking crises, Capital account, Currency crises, Exchange rate arrangements, Fiscal policy

Keywords: Country characteristic, Exchange rate, Macro policy contraction, Monetary policy, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/183
Stock No:

WPIEA2009183
ISBN:

9781451873306
ISSN:

1018-5941

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